Viewability is one of the key aspects when assessing the value of digital advertising. While a few years ago, publishers could earn revenue simply by placing ads on their site without considering if the ad got any views. Today, with digital advertising, advertisers value viewable impressions. Publishers should understand how the costs of impressions are measured.
In this post
Wondering how to use vCPM to your advantage? Don’t worry. Here at CodeFuel, we’ve got you covered. This guide will explain how vCPM works and improve your revenue.
|vCPM refers to the cost of a thousand viewable impressions. That means how many people see the ads on the web page.
What Exactly is Viewability?
The Interactive Advertising Bureau (IAB) uses the following criteria to define a view:
- The percentage of the ad visible on the user screen should be at least 50% and be displayed at least for one second.
- For large ads above 242,5 pixels, the percentage of the ad visible should be at least 30% for one second.
- Users should at least see more than 50% of video ads for longer than one second.
For an ad to be considered “viewed” — and therefore, measured into the 1000 views, it should meet those conditions.
What You Should Know about vCPM
When an advertiser wants to bid on vCPM, they need to know the percentage of the ad visible and the number of viewable impressions, which will determine the actual vCPM. Any portion of the ad not visible on-screen (i.e., outside the screen) gets deducted from the total.
Ads Above the Fold
“Above the fold” refers to the section of your site that appears first to the users when they visit any page. For instance, the header, text, images, video, and ads appear before the user scroll down.
When you place an ad above the fold, more people will see the ad since 100% of the ad appears. However, the average ad viewability is only 68% because of the bounce rates.
Ads Below the Fold
When you place an ad below the fold, the ad viewability is reduced to 40%. Therefore, it is better to place it directly below the fold and figure out what position is best for you. You can use heatmaps to determine which ad placement works better with your website users.
What Are the Benefits of vCPM?
Advertisers look at viewability as a KPI that helps them assess the value of the impressions inventory. These days, advertisers demand 100% viewability, which is not feasible because a percentage of users will bounce.
vCPM provides cost savings for advertisers because they don’t have a non-viewable percentage like CPM.
For publishers, adding vCPM to your programmatic strategy can be an advantage since advertisers bid more on viewable impressions.
Moreover, because Google only pays for viewable ads, it is increasingly important for publishers to improve their vCPM to maximize their revenue.
vCPM vs. CPM
CPM stands for “cost per mille,” or the cost per a thousand impressions. In this case, advertisers should pay for every thousand served impressions, regardless of whether the ad is viewed or not.
The calculation formula for CPM is as follows:
CPM = Total Campaign Spend X 1000
Number of Impressions
CPM doesn’t account for viewability which is an advantage for publishers. A publisher with 20% viewability and others with 80% viewability gets the same payment.
vCPM considers the ads that are visible to the user. Therefore vCPM increases when the ad viewability decreases. When a publisher has 20% viewability, an advertiser needs to buy five times more impressions. But if the publisher’s viewability is over 50%, advertisers can buy one impression.
Learn more about pricing models here.
How To Calculate vCPM
VCPM stands for the cost per thousand viewable impressions. Advertisers pay based on 1000 viewable impressions on the ad placed, not only the ads served. Therefore, advertisers will only pay for active and visible ads on the user’s screen. As such, the viewability determines the actual cost of the campaign.
The formula for calculating VCPM is as follows:
vCPM = Total Spend / 1000
(Total impressions * % in-view)
Let’s explain it better with an example:
Let’s say we review our campaign data and find the following variables:
- Budget: $100,000 as part of the total company’s advertising budget.
- CPM: $1.20 per click
- Total impressions: $ 20,000,000
- Viewable impressions: $10,000,000
- Maximum vCPM bid: $4.00
- Ad viewability: 68%
When we apply our formula:
(100,000) / (20,000,000 * 68%) /1000 = $7.35
This result means each viewable CPM is $7.35.
VCPM and Percent-in-View
Ad viewability is not the only factor to consider. For example, a buyer with a budget of $1000 can:
- Buy 100,000 impressions with 25% viewability
- Buy 30,000 impressions with 50% viewability.
The choice is clear when you calculate vCPM for both options.
For option A, vCPM is $40, and the B option is $66.6. So for the advertiser, the second option will be more expensive.
What does it mean for publishers? For publishers, increasing the viewability can improve your bids in open marketplaces.
What Is a High vCPM?
A good viewability rate is above 68%, which is the industry standard. However, consider that the lower the viewability, the higher the vCPM. A high vCPM can deter advertisers or encourage them depending on your viewability rate.
An advertiser can be more likely to bid on impressions with low vCPM and high viewability.
How Can You Improve Your vCPM?
vCPM depends on ad viewability metrics. Here are some tips for publishers to improve viewability and increase the vCPM.
- Experiment with different ad placements to improve your ad performance.
- Compare the different placements’ data and use heatmaps to understand which positions work better.
- Avoid cluttering your webpage with too many ads since it will disrupt the user experience.
- Try different ad formats. For instance, Google reports that vertical ads perform better than horizontal ads.
Instead of seeing viewability as another metric, consider it your potential edge to compete with other publishers. By applying the tips we mention in this article, you can attract premium advertisers. Even better, you can leverage CodeFuel, a monetization platform that will increase your revenue as a publisher while keeping advertisers happy. Try CodeFuel today.